May 26, 1997


Rodney E. Slater, Secretary
U.S. Department of Transportation
400 7th Street SW
Washington, DC 20590


Dear Mr. Secretary:

In a very short time nearly every major country in Europe and South America will have privatized their freight and passenger rail systems. In every case, those governments have seen that continuation of existing publicly operated rail systems would lead to financial collapse and service disruption.

For nearly five years, our company, Guilford Rail System, a division of Guilford Transportation Industries Inc., has participated in several of these rail privatization efforts. We met with the British as they were preparing their White Paper, the source document for Britain's rail privatization program. We participated in the initial stages of the privatization process in New Zealand and recently met with the international investment firm of Deutsche Morgan Grenfell to discuss our interest in participating in the privatization of rail services throughout Europe. This experience has provided us with the insight to recognize that the railroad most in need of such treatment is not located in some foreign land, but right here in our own back yard. It is Amtrak.

In this morning's news, Amtrak Vice President Tim Gillespie was quoted saying, "We'll continue to borrow money until the line of credit runs out and we go bankrupt." News reports also indicate that Amtrak is presently borrowing funds and paying interest rates of 17 percent. It is becoming increasingly clear that Congress and the Department of Transportation are faced with two options, chaos through bankruptcy or a planned transition of Amtrak services to the private sector.

Recently, I met with all of the major freight railroad members of the Association of American Railroads. Based on those discussions, I can tell you that our industry is growing increasingly concerned that Amtrak can no longer meet its obligations, and is beginning to show signs of failure. The State of California has made it clear that it would welcome an alternative to Amtrak as the operator of West Coast passenger corridors. Here in Boston, Chairman Jim Kerasiotes of the Massachusetts Bay Transportation Authority has publicly stated his dissatisfaction with Amtrak services.

I believe that it is time to take a responsible approach to the inevitable failure of Amtrak, and to begin the privatization process in this country. I am writing to you today to request a meeting with you or your staff to immediately begin negotiations with your Department as the lienholder, for the sale or lease of the Northeast Corridor. Our company is prepared to purchase or lease the rail line and operate private passenger services throughout the Corridor. We are also prepared to immediately begin discussions with commuter authorities whose services operate on the Corridor to determine the best means of continuing and improving those services. Finally, we are prepared to work with other freight carriers to discuss the responsible operation of freight service on the Corridor so that the line can continue to serve not only as an important passenger route but also a resource that can play a meaningful role in reducing highway truck congestion along arteries such as I-95.

It is my belief that passenger service on the Northeast Corridor and other high volume corridors in this country, if properly structured, could operate profitably or at significantly lower cost than service presently offered by Amtrak. States such as California have already indicated an interest in seeking alternatives to Amtrak. It is critical that the process start now in order to provide for a smooth transition from what will otherwise be a very disruptive and expensive end of the Amtrak system.

I look forward to your response.

Respectfully,

David A. Fink
President